Where do I enter the purchase of a new car for independent contract work?

Hello hbinfinity

It is good to purchase and use new assets for business purposes. The purchase of the new car doesn't get claimed anywhere on the tax return as an event. The Schedule C Vehicle expenses pick up the portions of the car use over the life of the car. Mileage is a way to track business use.

There are two ways that the business use is claimed on the tax return. For actual expenses, which is a way to directly use the new car value, business use is the key metric. The business miles divided by the total miles create the business use percentage. This is used to determine the amount of depreciation and actual expenses that may be tied to the business as car expenses.

The other way is to claim the standard mileage method. This involves tracking and claiming the mileage allowance set up by the IRS to track multiply expenses easily and with minimal records. Currently that allowance rate is $0.70 per mile for the business.

There are three expenses that are tied to both methods: Toll both and parking expenses, Property taxes (part of state registration fees), and Loan Interest paid (another large part of buying a "new" car).

In summary, the new car purchase event is not recorded or claimed, but the business use is applicable to your small business teaching piano students.